Metro Bank Q3 results show another quarter of outstanding growth and the bank reaffirms its 2020 targets. Accelerating loan growth continues to drive improving operational leverage while deposit growth continues to gather pace.

As chairman and founder Vernon Hill tells RBI: “Metro Bank continues to have the lowest cost of money in the UK.”

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Metro Bank’s cost of deposits falls below the base rate for the first time, up by only 2 basis points to 61bps in Q3.

Metro Bank Q3 underlying profit before tax is £15.1m more than double the same period last year.

For the nine months to end September, underlying profit before tax has grown 197% year-on-year to £39.2m. Statutory profit after tax of £25.1m has grown 222% compared to £7.8m for the nine months to 30 September 2017.

Metro Bank Q3 highlights:

  • Deposit growth of 38% year-on-year or £4.1bn to £14.8bn;
  • Net deposit growth per store of £6.2bn in Q3, representing annualised deposit growth per store of £75.6m;
  • Record lending growth of 52% y-o-y or £4.5bn to £13.1bn;
  • Net customer growth of 102,000 in Q3 bringing total customers to more than 1.5 million, and
  • Customer net interest margin inched up in Q3 to 2.21% from 2.2% in the prior quarter.

In Q3 Metro Bank opened its 60th store. Hill reaffirms that the bank’s 2020 targets remain on track. Comparative store deposit growth (deposits numbers from branches that have been operating for more than a full year) is 33% as at end September.

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Metro Bank’s customer service ethos is reflected in the inaugural Competition and Markets Authority service quality rankings.

Metro ranks first for store and overdraft services among the largest 16 UK bank brands. Moreover, Metro is the only provider to be ranked in the top five for all qualifying retail and business services.

In a note to clients, Investec analyst Ian Gordon says:” Metro really seems to be the stock that UK investors love to hate. The facts continue to sit uncomfortably with the bears’ narrative.”

The Metro Bank share price is down by around 30% for the year to date.

Gordon adds: “The outlook remains robust.”